Light & Wonder Faces 50 Million Loss from Dragon Train Legal Battle
Industry experts have predicted that Light & Wonder Inc. (L&W) could suffer sizable financial losses, potentially more than $50 million, from the legal battles surrounding its Dragon Train slot game.
Legal battle over Dragon Train slot may cost Light & Wonder $50 million.
LISTEN TO THIS ARTICLE:In March, Aristocrat Technologies Inc. filed a lawsuit against L&W, alleging that the game bears similarities to Aristocrat’s Dragon Link series. In September, a court ruled in favor of Aristocrat, ordering L&W to cease the sale of “Dragon Train” in North America. Unsurprisingly, there has been a great deal of speculation over how much the legal battle will cost L&W.
L&W Face Costs of $50m to $150M
David Bain, an analyst with B. Riley Securities, published a report of estimated costs. He predicted that L&W could spend approximately $28.6 million to replace the existing Dragon Train machines in North America. However, the overall financial impact could be much higher as when factoring in legal fees and potential damages, Bain suggests that L&W might face a total cost of anywhere from $50 million to $150 million.
L&W’s president and CEO, Matt Wilson, confirmed that the company is complying with the court order and has begun removing around 2,000 Dragon Train units from North American markets. Wilson also revealed plans to release an updated version of the game, possibly called “Dragon Train 2.0”, with the goal of minimizing disruptions by swapping out current machines for new ones.
In his report, Bain also noted that L&W had sold 4,800 units of Dragon Train in Australia. If the company is forced to replace those machines, it could face an additional cost of $62.4 million. According to Bain, each replacement unit, including installation, costs roughly $13,000.
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Optimism for L&W’s Future
Nonetheless, Bain is optimistic about L&W’s long-term prospects. He believes the market overreacted to the court’s ruling. While L&W’s stock dropped by 17%, Bain pointed out that Dragon Train accounts for less than 5% of the company’s projected 2025 earnings. He also noted that L&W has not changed its goal of achieving $1.4 billion in EBITDA for 2025, with Dragon Train expected to contribute around $70 million.
Bain also drew attention to the ability of Light & Wonder to maintain strong customer relationships, which has helped the company in replacing the disputed games. He expects that most customers will accept the new versions, making the transition smooth for all involved.
Looking ahead, Bain noted that L&W’s diverse product offerings, including its SciPlay division, continue to perform well. He also mentioned that recent industry mergers have reduced competition, further strengthening L&W’s position in the gaming sector.
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